-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RyoFVXbswO8sQtFg6A9B/L5Fokbjsz8Ngt8Z+vYaQ1PGawo+9lWvvepjVJtL/vJX SC5ivv+ytqJkMwLmZp30lw== 0001157523-04-009802.txt : 20041026 0001157523-04-009802.hdr.sgml : 20041026 20041026074531 ACCESSION NUMBER: 0001157523-04-009802 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20041026 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041026 DATE AS OF CHANGE: 20041026 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVANTA CORP CENTRAL INDEX KEY: 0000096638 STANDARD INDUSTRIAL CLASSIFICATION: PERSONAL CREDIT INSTITUTIONS [6141] IRS NUMBER: 231462070 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-14120 FILM NUMBER: 041095364 BUSINESS ADDRESS: STREET 1: P.O. BOX 844 STREET 2: WELSH & MCKEAN ROADS CITY: SPRING HOUSE STATE: PA ZIP: 19477 BUSINESS PHONE: 2154445341 MAIL ADDRESS: STREET 1: C/O WELSH & MCKEAN ROADS STREET 2: P.O. BOX 844 CITY: SPRING HOUSE STATE: PA ZIP: 19477-0844 FORMER COMPANY: FORMER CONFORMED NAME: TSO FINANCIAL CORP DATE OF NAME CHANGE: 19880306 FORMER COMPANY: FORMER CONFORMED NAME: TEACHERS SERVICE ORGANIZATION INC DATE OF NAME CHANGE: 19850812 8-K 1 a4749621.txt ADVANTA CORP. 8-K EFFECTIVE AUGUST 23RD, 2004 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) October 26, 2004 ---------------- Advanta Corp. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 0-14120 23-1462070 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) Welsh & McKean Roads, P.O. Box 844, Spring House, Pennsylvania 19477 - -------------------------------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (215) 657-4000 -------------- - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operation and Financial Condition. The information in this Current Report on Form 8-K is to be considered "filed" under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). On October 26, 2004, Advanta Corp. (the "Company") issued a press release describing its results for the quarter ended September 30, 2004. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference. On October 26, 2004 at 9:00 a.m. Eastern time, Company management also will hold a conference call, publicly announced in its press release dated October 7, 2004. The call will be broadcast for the public simultaneously over the Internet through www.advanta.com or www.vcall.com. Replays of the call are available on the Vcall site for 30 days from the date of the call. In addition to historical information, this Current Report on Form 8-K contains forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ from those projected. Risks that may affect the Company's future performance are detailed in the Company's filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. Item 9.01 Financial Statements, Pro Forma Financial Information and Exhibits. (c) Exhibits. The following exhibit relating to Item 2.02 shall be deemed "filed" under the Exchange Act: 99.1 Press Release issued October 26, 2004 regarding financial results for the quarter ended September 30, 2004. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Advanta Corp. ----------------------------- (Registrant) Date: October 26, 2004 By: /s/ Elizabeth Mai ----------------------------- Elizabeth H. Mai Senior Vice President, Secretary and General Counsel EXHIBIT INDEX ------------- Exhibit Description Method of Filing - ------- ----------- ---------------- 99.1 Press release issued October 26, 2004 Filed herewith regarding financial results for the quarter ended September 30, 2004 EX-99.1 2 a4749621ex991.txt EXHIBIT 99.1 Exhibit 99.1 Advanta Reports Third Quarter Earnings; Business Card Results Consistent With Expectations And Reflect Strong Asset Quality SPRING HOUSE, Pa.--(BUSINESS WIRE)--Oct. 25, 2004--Advanta Corp. (NASDAQ:ADVNB; ADVNA) today reported net income for Advanta Business Cards of $11.9 million for third quarter 2004, an increase of 40% over the $8.5 million reported for third quarter 2003 and consistent with the Company's expectations. Advanta reported consolidated net income for the quarter of $10.6 million or $0.38 per diluted share for Class A and Class B shares combined up from $6.9 million or $0.27 per diluted share for third quarter 2003. Consolidated net income includes asset valuation charges associated with the valuation of the Company's venture capital portfolio of $0.04 per diluted share for third quarter 2004 and $0.05 per diluted share for third quarter 2003. "We are pleased to report another quarter of strong asset quality performance," said Dennis Alter, Chairman and CEO. "During the quarter, our managed net charge-off rate declined 51 basis points and our over 30 day delinquency rate for managed business credit card receivables is the lowest we have reported in four years. We deepened relationships through new alliances and successful customer relationship activities, as evidenced by our robust transaction volume and solid receivables growth." Advanta ended the quarter with managed business credit card receivables of $3.2 billion as compared to $2.9 billion at September 30, 2003. The current quarter's earnings reflect a 179 basis point decline in net principal charge-offs on managed business credit card receivables to 6.48% on an annualized basis, as compared to 8.27% for third quarter 2003. Over 30 day delinquencies on managed business credit card receivables declined 173 basis points to 4.42% and over 90 day delinquencies decreased 72 basis points to 2.13%, each as compared to third quarter 2003. At September 30, 2004, owned business credit card receivables were $710 million as compared to $533 million at September 30, 2003. Net principal charge-offs on owned business credit card receivables declined 200 basis points to 6.46%, as compared to 8.46% for third quarter 2003. Over 30 day delinquencies on owned business credit card receivables declined 159 basis points to 4.16% and over 90 day delinquencies decreased 66 basis points to 2.01%, each as compared to third quarter 2003. Conference Call Details Advanta management will hold a conference call with analysts and institutional investors today, October 26, at 9:00 a.m. Eastern time. The call will be broadcast simultaneously for the public over the Internet through www.advanta.com or www.vcall.com. To listen to the live call, please go to the website at least 15 minutes early to register, download, and install any necessary audio software. Replays of the call will be available beginning at noon today on the Internet at www.advanta.com or www.vcall.com or by dialing (719) 457-0820 and referring to confirmation code 953279. The conference call may include a discussion of non-GAAP financial measures, which are reconciled to the most directly comparable GAAP financial measure in this press release or our statistical supplements, both available at www.advanta.com in the "Corporate Info" section. About Advanta Advanta focuses on the small business market and related community, providing funding and support to the nation's small businesses through innovative products and services. Using its direct marketing and information based expertise, Advanta identifies potential customers and provides a high level of service tailored to the unique needs of small businesses. Advanta is one of the nation's largest issuers (through Advanta Bank Corp.) of MasterCard business credit cards to small businesses. Since 1951, Advanta has pioneered many of the marketing techniques common in the financial services industry today, including remote lending and direct mail, affinity and relationship marketing. Learn more about Advanta at www.advanta.com. This Press Release contains forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ from those projected. Risks that may affect the Company's future performance are detailed in the Company's filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. In addition to the GAAP results provided throughout this document, the Company has provided managed receivable data and other non-GAAP financial measurements. Management believes that these non-GAAP financial measures used in managing the business may provide users additional useful information. The tables attached to this press release include a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure and a description of why the non-GAAP financial measures are useful to investors. ADVANTA SEGMENT INCOME STATEMENT (in thousands) Three Months Ended September 30, 2004 - ---------------------------------------------------------------------- Advanta Business Venture Cards Capital Other(A) Total -------- -------- -------- -------- Interest income $ 25,916 $ 1 $ 1,933 $ 27,850 Interest expense 9,224 85 1,930 11,239 -------- -------- -------- -------- Net interest income 16,692 (84) 3 16,611 Provision for credit losses 11,698 0 (40) 11,658 -------- -------- -------- -------- Net interest income after provision for credit losses 4,994 (84) 43 4,953 Noninterest revenues: Securitization income 31,410 0 0 31,410 Servicing revenues 12,382 0 0 12,382 Other revenues, net 28,849 (2,058) 76 26,867 -------- -------- -------- -------- Total noninterest revenues 72,641 (2,058) 76 70,659 Operating expenses 57,967 5 119 58,091 -------- -------- -------- -------- Income (loss) before income taxes 19,668 (2,147) 0 17,521 Income tax expense (benefit) 7,769 (848) 0 6,921 -------- -------- -------- -------- Net income (loss) $ 11,899 $ (1,299) $ 0 $ 10,600 ======== ======== ======== ======== Three Months Ended September 30, 2003 - ---------------------------------------------------------------------- Advanta Business Venture Cards Capital Other(A) Total -------- -------- -------- -------- Interest income $ 31,597 $ 0 $ 1,969 $ 33,566 Interest expense 12,339 117 509 12,965 -------- -------- -------- -------- Net interest income 19,258 (117) 1,460 20,601 Provision for credit losses 16,544 0 19 16,563 -------- -------- -------- -------- Net interest income after provision for credit losses 2,714 (117) 1,441 4,038 Noninterest revenues: Securitization income 28,558 0 0 28,558 Servicing revenues 9,549 0 0 9,549 Other revenues, net 26,947 (1,985) 1,015 25,977 -------- -------- -------- -------- Total noninterest revenues 65,054 (1,985) 1,015 64,084 Expenses: Operating expenses 53,983 543 236 54,762 Minority interest in income of consolidated subsidiary 0 0 2,220 2,220 -------- -------- -------- -------- Total expenses 53,983 543 2,456 56,982 -------- -------- -------- -------- Income (loss) before income taxes 13,785 (2,645) 0 11,140 Income tax expense (benefit) 5,307 (1,018) 0 4,289 -------- -------- -------- -------- Net income (loss) $ 8,478 $ (1,627) $ 0 $ 6,851 ======== ======== ======== ======== (A) Other includes investment and other activities not attributable to the Advanta Business Cards or Venture Capital segments. ADVANTA SUPPLEMENTAL NON-GAAP DISCLOSURE ADVANTA BUSINESS CARDS MANAGED INCOME STATEMENT (in thousands) In addition to evaluating the financial performance of the Advanta Business Cards segment under generally accepted accounting principles (GAAP), we evaluate Advanta Business Cards' performance on a managed basis. Our managed receivable portfolio is comprised of both owned and securitized business credit card receivables. We sell business credit card receivables through securitizations accounted for as sales under GAAP. We continue to own and service the accounts that generate the securitized receivables. Managed data presents performance as if the securitized receivables had not been sold. We believe that performance on a managed basis provides useful supplemental information because we retain interests in the securitized receivables and, therefore, we have a financial interest in and exposure to the performance of the securitized receivables. Revenue and credit data on the managed portfolio provides additional information useful in understanding the performance of the retained interests in securitizations. A reconciliation of these managed financial measures to the most directly comparable GAAP financial measures is included in this press release. Three Months Ended ----------------------- Sept. 30, Sept. 30, 2004 2003 ---------- ---------- Interest income $ 116,024 $ 114,977 Interest expense 22,963 21,696 ---------- ---------- Net interest income 93,061 93,281 Provision for credit losses 52,438 60,132 ---------- ---------- Net interest income after provision for credit losses 40,623 33,149 Noninterest revenues 37,012 34,619 ---------- ---------- Risk-adjusted revenues (A) 77,635 67,768 Operating expenses 57,967 53,983 ---------- ---------- Income before income taxes 19,668 13,785 Income tax expense 7,769 5,307 ---------- ---------- Net income $ 11,899 $ 8,478 ========== ========== Average managed business credit card receivables $3,159,987 $2,859,187 (A) Risk-adjusted revenues represent net interest income and noninterest revenues, less provision for credit losses. ADVANTA HIGHLIGHTS (in thousands, except per share data) Three Months Ended Percent Change ------------------------------ From Sept. 30, June 30, Sept. 30, Prior Prior EARNINGS 2004 2004 2003 Quarter Year - ---------------------------------------------------------------------- Basic income from continuing operations per common share: Class A $ 0.40 $ 0.42 $ 0.27 (4.8)% 48.1 % Class B 0.43 0.44 0.29 (2.3) 48.3 Combined (A) 0.42 0.43 0.28 (2.3) 50.0 Diluted income from continuing operations per common share: Class A 0.37 0.39 0.26 (5.1) 42.3 Class B 0.38 0.40 0.28 (5.0) 35.7 Combined (A) 0.38 0.40 0.27 (5.0) 40.7 Basic net income per common share: Class A 0.40 0.42 0.27 (4.8) 48.1 Class B 0.43 0.45 0.29 (4.4) 48.3 Combined (A) 0.42 0.44 0.28 (4.5) 50.0 Diluted net income per common share: Class A 0.37 0.40 0.26 (7.5) 42.3 Class B 0.38 0.41 0.28 (7.3) 35.7 Combined (A) 0.38 0.41 0.27 (7.3) 40.7 Return on average common equity 11.38 % 12.21 % 8.36 % (6.8) 36.1 COMMON STOCK DATA - ---------------------------------------------------------------------- Weighted average common shares used to compute: Basic earnings per common share Class A 8,803 8,794 8,978 0.1 % (1.9)% Class B 16,479 16,172 15,100 1.9 9.1 --------- -------- --------- Total 25,282 24,966 24,078 1.3 5.0 Diluted earnings per common share Class A 8,803 8,794 8,978 0.1 (1.9) Class B 19,303 18,329 16,251 5.3 18.8 --------- -------- --------- Total 28,106 27,123 25,229 3.6 11.4 Ending shares outstanding Class A 9,607 9,607 9,687 0.0 (0.8) Class B 18,264 18,093 17,390 0.9 5.0 --------- -------- --------- Total 27,871 27,700 27,077 0.6 2.9 Stock price: Class A High $ 23.55 $ 23.21 $ 11.75 1.5 100.4 Low 19.73 15.43 9.49 27.9 107.9 Closing 22.80 21.93 10.98 4.0 107.7 Class B High 24.44 24.12 11.95 1.3 104.5 Low 20.30 15.13 9.66 34.2 110.1 Closing 24.19 22.92 10.69 5.5 126.3 Cash dividends declared: Class A 0.095 0.095 0.063 0.0 50.0 Class B 0.113 0.113 0.076 0.0 50.0 Book value per common share 14.54 14.28 13.56 1.8 7.2 (A) Combined represents income available to common stockholders divided by the combined total of Class A and Class B weighted average common shares outstanding. ADVANTA BUSINESS CREDIT CARD STATISTICS (in thousands) Three Months Ended Percent Change ------------------------------------ From Sept. 30, June 30, Sept. 30, Prior Prior 2004 2004 2003 Quarter Year ---------------------------------------------------- Transaction volume $2,125,757 $1,994,647 $1,816,195 6.6 % 17.0 % Securitization volume increase (decrease) excluding replenishment sales (35,000) 0 (19,750) N/M 77.2 Average managed receivables: Owned 646,934 583,581 734,715 10.9 (11.9) Securitized 2,513,053 2,532,885 2,124,472 (0.8) 18.3 ---------- ---------- ---------- Managed (A) 3,159,987 3,116,466 2,859,187 1.4 10.5 Ending managed receivables: Owned 709,991 549,862 533,398 29.1 33.1 Securitized 2,511,030 2,546,777 2,343,221 (1.4) 7.2 ---------- ---------- ---------- Managed (A) 3,221,021 3,096,639 2,876,619 4.0 12.0 - ---------------------------------------------------------------------- CREDIT QUALITY - OWNED - ------------------ Receivables 30 days or more delinquent $ 29,552 $ 25,493 $ 30,681 Receivables 90 days or more delinquent 14,305 13,309 14,225 As a percentage of gross receivables: Receivables 30 days or more delinquent 4.16 % 4.64 % 5.75 % (10.3)% (27.7)% Receivables 90 days or more delinquent 2.01 2.42 2.67 (16.9) (24.7) Net principal charge-offs: Amount $ 10,448 $ 9,854 $ 15,544 As a percentage of average gross receivables (annualized) 6.46 % 6.75 % 8.46 % (4.3) (23.6) CREDIT QUALITY - SECURITIZED - ------------------ Receivables 30 days or more delinquent $ 112,674 $ 123,123 $ 146,206 Receivables 90 days or more delinquent 54,354 63,980 67,795 As a percentage of gross receivables: Receivables 30 days or more delinquent 4.49 % 4.83 % 6.24 % (7.0)% (28.0)% Receivables 90 days or more delinquent 2.16 2.51 2.89 (13.9) (25.3) Net principal charge-offs: Amount $ 40,740 $ 44,640 $ 43,588 As a percentage of average gross receivables (annualized) 6.48 % 7.05 % 8.21 % (8.1) (21.1) CREDIT QUALITY - MANAGED (A) - ------------------ Receivables 30 days or more delinquent $ 142,226 $ 148,616 $ 176,887 Receivables 90 days or more delinquent 68,659 77,289 82,020 As a percentage of gross receivables: Receivables 30 days or more delinquent 4.42 % 4.80 % 6.15 % (7.9)% (28.1)% Receivables 90 days or more delinquent 2.13 2.50 2.85 (14.8) (25.3) Net principal charge-offs: Amount $ 51,188 $ 54,494 $ 59,132 As a percentage of average gross receivables (annualized) 6.48 % 6.99 % 8.27 % (7.3) (21.6) (A) Managed statistics are non-GAAP financial measures and represent the sum of owned (GAAP) business credit card statistics and securitized business credit card statistics. We believe that performance on a managed basis provides useful supplemental information because we retain interests in the securitized receivables and, therefore, we have a financial interest in and exposure to the performance of the securitized receivables. N/M - Not Meaningful ADVANTA RECONCILIATION OF MANAGED INCOME STATEMENT AND BALANCE SHEET MEASURES TO GAAP FINANCIAL MEASURES (in thousands) In addition to evaluating the financial performance of the Advanta Business Cards segment under generally accepted accounting principles (GAAP), we evaluate Advanta Business Cards' performance on a managed basis. Our managed receivable portfolio is comprised of both owned and securitized business credit card receivables. We sell business credit card receivables through securitizations accounted for as sales under GAAP. We continue to own and service the accounts that generate the securitized receivables. Managed data presents performance as if the securitized receivables had not been sold. We believe that performance on a managed basis provides useful supplemental information because we retain interests in the securitized receivables and, therefore, we have a financial interest in and exposure to the performance of the securitized receivables. Revenue and credit data on the managed portfolio provides additional information useful in understanding the performance of the retained interests in securitizations. Three Months Ended September 30, 2004 -------------------------------------- Advanta Advanta Business Business Cards Securitization Cards GAAP Adjustments Managed ----------- -------------- ----------- INCOME STATEMENT MEASURES Interest income $ 25,916 $ 90,108 $ 116,024 Interest expense 9,224 13,739 22,963 Net interest income 16,692 76,369 93,061 Securitization income 31,410 (31,410) 0 Servicing revenues 12,382 (12,382) 0 Other revenues, net 28,849 8,163 37,012 Total noninterest revenues 72,641 (35,629) 37,012 Provision for credit losses 11,698 40,740 (A) 52,438 -------------------------------------- BALANCE SHEET MEASURES Average business credit card receivables 646,934 2,513,053 3,159,987 Ending business credit card receivables 709,991 2,511,030 3,221,021 Business credit card receivables: 30 days or more delinquent 29,552 112,674 142,226 90 days or more delinquent 14,305 54,354 68,659 Net principal charge-offs 10,448 40,740 51,188 Three Months Ended September 30, 2003 -------------------------------------- Advanta Advanta Business Business Cards Securitization Cards GAAP Adjustments Managed ----------- -------------- ----------- INCOME STATEMENT MEASURES Interest income $ 31,597 $ 83,380 $ 114,977 Interest expense 12,339 9,357 21,696 Net interest income 19,258 74,023 93,281 Securitization income 28,558 (28,558) 0 Servicing revenues 9,549 (9,549) 0 Other revenues, net 26,947 7,672 34,619 Total noninterest revenues 65,054 (30,435) 34,619 Provision for credit losses 16,544 43,588 (A) 60,132 -------------------------------------- BALANCE SHEET MEASURES Average business credit card receivables 734,715 2,124,472 2,859,187 Ending business credit card receivables 533,398 2,343,221 2,876,619 Business credit card receivables: 30 days or more delinquent 30,681 146,206 176,887 90 days or more delinquent 14,225 67,795 82,020 Net principal charge-offs 15,544 43,588 59,132 (A) The provision for credit losses includes the amount by which the provision for credit losses would have been higher had the securitized receivables remained as owned and the provision for credit losses on securitized receivables been equal to actual reported charge-offs. CONTACT: Advanta Corp. Investor Relations: David Weinstock, 215-444-5335 dweinstock@advanta.com or Communications: Jennifer Lyons, 215-444-5073 AdvantaCommunications@advanta.com -----END PRIVACY-ENHANCED MESSAGE-----